CHINA: Crackdown to cut baijiu profits by one-fifth - survey
Baijiu makers should brace for a 20% drop in profits, at least, as the Chinese Government's corruption crackdown curbs corporate entertainment budgets, according to a new report.
The white spirit, which accounts for 99% of all spirit sales in China, has been hardest hit by the crackdown, according to the DDMA China Market Snapshot Report, released yesterday (22 July). In a survey of 103 corporate firms, 35% said they were buying less baijiu for entertaining compared to 7% who were cutting wine costs and 1% on international spirits.
DDMA said the figures translate to a “minimum reduction” of 20% in the profits of leading Chinese baijiu companies. According to DDMA, 70% of baijiu makers' profits come from corporate expenditure and gifting.
The survey, which was conducted last month, also found that 40% of Chinese companies said they are reducing corporate entertainment expenditure by buying less alcohol.
The introduction of a clampdown on gifting to civil servants and ban on alcohol at luxury banquets, introduced late last year, has hit the performance of drinks compaines in China, including Pernod Ricard and Diageo.
Over the last 10 years of rapid acquisitions, Pernod Ricard has built a strong portfolio of premium brands on a global scale. Most of its brands enjoy a leading position in international markets. The ...
As well as ranking third in the global spirits market, Pernod Ricard is the world’s fourth largest wine producer. This profile analyses the company’s efforts to adapt its wine offer to challenging and...
With very limited resources for expansion through acquisition until at least 2015, Pernod Ricard’s key focus has to be through organic growth. The profile looks at how its current portfolio of brands ...
Eyebrows rose earlier this week at the US$16bn that Suntory is set to pay for Beam Inc. At 20 times the company's EBITDA, the transaction is at the more expensive end of the scale. Here, courtesy of a...
Alcoholic Drinks in India industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2007-11, and forecast to 2016). The...
- A tobacco analogy soft drinks will want to embrace
- Pernod's Portman Group penalty - a coincidence?
- just The Preview - SABMiller's Q1
- just Five Years Ago: A-B InBev sells Oriental
- Cleaning China's seedier side brings Remy balance
- Diageo faces public consultation over W&M sale
- Diageo's Captain Morgan Facebook ad banned
- William Grant silent on Drambuie bid talk
- Bacardi to fight US football team legal action
- Remy posts Q1 sales drop as Edrington loss bites